Even with little data to go off of yesterday and today, the United States Dollar starts the morning a bit stronger against most G10 currencies as month-end trading begins.
Overview
UK markets return today from a long weekend, likely to provide a bit more volume and volatility than yesterday’s lame-duck session. US consumer confidence and JOLTS job openings are due out today – though considered minor data points in the grand scheme of things, they could help markets parse through the larger economic picture in the US.
News out of China, once again, seems to be the primary driver of price action this morning. China’s largest banks have been directed to cut interest rates on a majority of the nation’s outstanding mortgages as well as cut deposit rates in an attempt to salvage the nation’s flailing property sector. Investor confidence in the world’s second-largest economy remains weak, and this was an expected incremental stimulus step that the central bank hinted at in mid-July, so it’s failing to really move the needle, and USD is sitting on top of the board as a result.
Markets continue to digest Jerome Powell’s appearance at the Jackson Hole summit last week as well. Fed futures now see a 50/50 shot of one more rate hike this year, more likely coming in November rather than September, an increase from before his speech. Additionally, his “higher-for-longer” refrain does seem to have resonated, and traders no longer expect to see a rate cut any time in the next calendar year. Of course, US GDP tomorrow, PCE Thursday, and employment data Friday may change this pricing, but for now, the Dollar is continuing its month-long trend of strength.
What to Watch Today…
- No major economic events are scheduled for today
- Monex USA Online is always open
MXN ⇓
Mexican Peso slipped moderately lower this morning after GDP figures showed the nation’s economy grew at a pace slightly below expectations last quarter, though still a higher figure than most major economies at the moment. The previous quarter’s figure was also revised lower, and local activity hit mildly to the downside as well. Likely related to China’s stuttering economic recovery, these readings marginally swing Banxico more dovish, but MXN still remains near 8-year highs seen last month.
JPY ⇓
Japanese Yen cannot seem to catch a break, sliding a further half a percent overnight through yet another key intervention threshold and weakening to its worst level since November of last year. News broke last night that Toyota had to temporarily close operations at its 14 Japanese plants, placing strain on the nation’s day-to-day economic life. Japan’s unemployment rate also increased for the first time in four months, placing the Bank of Japan between a rock and a hard place as its two priorities of shoring its currency and keeping its economy strong may be in diametric opposition to each other.
